Mollie R. Lerner v. Bela LLC d/b/a The Perch Hotel, et als.

• Court: District Court, D. Puerto Rico
• Decided: January 21, 2026
• Docket: 3:25-cv-01546
• Status: Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

MOLLIE R. LERNER,

Plaintiff,

v. Civil No. 25-1546 (FAB)

BELA LLC d/b/a THE PERCH HOTEL, et als.,

Defendants.

OPINION AND ORDER

BESOSA, Senior District Judge. Before the Court is defendant Universal Insurance Company (“Universal”)’s motion to dismiss the complaint. (Docket No. 8.) For the following reasons, Universal’s motion to dismiss is DENIED. I. Background According to the allegations in the complaint, on October 12, 2024, plaintiff Mollie Lerner (“Lerner”), a resident of North Carolina visiting Puerto Rico, went to the Perch Hotel (the “Hotel”)1 to rent a bicycle. (Docket No. 1 at p. 3.) The Hotel rents bicycles to both guests and non-guests; Lerner was not staying at the hotel but at a nearby Airbnb. Id. at pp. 1; 3-4. Lerner was riding the rented bicycle back to her Airbnb to pick up water and sunscreen when she encountered a steep hill. Id. at

1 The Hotel is owned and operated by a company called Bela LLC, which is the defendant in this case. See Docket No. 1 at p. 2. Civil No. 25-1546 (FAB) 2

p. 4. As she rode down the hill, she picked up speed, but when she tried to apply the brakes, the bike did not slow down. Id. She swerved into the road, fell over the bicycle’s handlebars, and was run over by a truck that was driving up the hill. Id. She sustained serious injuries. Id. at pp. 4-5. Lerner sued the Hotel, alleging that her accident was caused by its negligence in maintaining the rental bicycle. Id. at pp. 6-8. She also sued Universal, the Hotel’s insurance provider. Id. at pp. 2, 8. The Hotel’s insurance policy with Universal provides commercial property and commercial general liability (“CGL”) insurance. See Docket No. 8-1. Lerner claims that the policy obliges Universal to indemnify the Hotel for any liability related to her claims. See Docket No. 1 at p. 2. Universal asks the Court to be dismissed as a defendant,

claiming that Lerner’s accident does not trigger its duties pursuant to the Hotel’s insurance policy. (Docket No. 8.) Universal’s main argument is that the policy does not provide coverage for liability related to the Hotel’s bicycle rentals because it only covers risks arising out of hotel and restaurant operations. Id. at pp. 6-8. Lerner disagrees, arguing that the Hotel’s bicycle rental fits within its hotel operations. (Docket No. 12 at pp. 4-6.) In the alternative, Lerner argues that the policy’s duty to defend is broader than its duty to indemnify, and Civil No. 25-1546 (FAB) 3

that at this stage in the proceedings, Universa1l’s motion to dismiss should be denied. Id. at pp. 6-7. II. Legal Standard Pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”), a defendant may move to dismiss an action for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a complaint must contain sufficient factual matter “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A court must decide whether the complaint alleges facts which “raise a right to relief above the speculative level.” Id. at 555. In doing so, a court is “obligated to view the facts of the complaint in the light most favorable to the plaintiffs, and to resolve any ambiguities in

their favor.” Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 17 (1st Cir. 2011). “When a complaint’s factual allegations are expressly linked to — and admittedly dependent upon — a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).” Sterngold Dental, LLC v. HDI Global Ins. Co., 929 F.3d 1, 6 (1st Cir. 2019) (citing Beddall v. State St. Bank & Tr. Co., 137 F.3d 12, 17 (1st Cir. 1998)) Civil No. 25-1546 (FAB) 4

(alterations omitted). With respect to Lerner’s claims against Universal, the insurance contract is such a document. See Docket No. 8-1. III. Discussion This case arises in diversity jurisdiction and the parties agree that Puerto Rico law supplies the substantive rules of decision. See Docket No. 1 at p. 8; Docket No. 8 at p. 2; Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). “This includes rules relating to interpretation of an insurance policy.” Sterngold Dental, 929 F.3d at 6 (alterations omitted). “Pursuant to Puerto Rico law, the Insurance Code of Puerto Rico controls the interpretation of insurance contracts.” Lorenzo v. Perfect Cleaning Servs., Civil No. 15-1301 (JAG), 2016 U.S. Dist. LEXIS 200313, at *6 (D.P.R. Dec. 2, 2016) (García-Gregory,

J.); see P.R. Laws Ann. tit. 26, §§ 1101-1137. The Puerto Rico Insurance Code mandates that “[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy, and as amplified, extended, or modified by any lawful rider, endorsement, or application attached to and made a part of the policy.” P.R. Laws Ann. tit. 26, § 1125. “[T]he Puerto Rico Supreme Court has [] established that since most of the insurance contracts sold in Puerto Rico are modeled after contracts drafted in the United States, both federal and Civil No. 25-1546 (FAB) 5

state law principles are useful and persuasive.” Fajardo Shopping Ctr. of P.R., Inc. v. Sun Alliance Ins. Co., 167 F.3d 1, 7 (1st Cir. 1999) (citing Quiñones López v. Esposa Jane Doe, 141 D.P.R. 139, 157-58 (1996)). “[L]anguage used in [insurance contracts] must ordinarily be construed within its common and usual meaning, not paying much attention to grammatical rigour, but to the general use and popular meaning of the idioms.” W Holding Co. v. AIG Ins. Co., Civil No. 11-2271 (GAG), 2014 U.S. Dist. LEXIS 94005, at *19 (D.P.R. Jul. 9, 2014) (Gelpí, J.) (quoting Guerrido García v. Univ. Cent. de Bayamón, 143 D.P.R. 337, 348 (1997)). “[E]xclusionary clauses must be restrictively construed so that the policy’s purpose of protecting the insured is met.” Id. “Any ambiguity must be resolved in favor of the insured.” Id. “This rule, however, does

not bind the court to construe in favor of the insured a clause that clearly and unambiguously favors the insurer in the controversy in question.” Id. at 19-20. In a CGL policy like Universal’s, “not all covered risks are specifically enumerated, and insurance is provided for all enumerated risks and for any other risk that has not been excluded, recognized or specified.” Demario v. Lamadrid-Maldonado, Civil No. 16-2897, 2023 U.S. Dist. LEXIS 74392, at *27-28 (D.P.R. Apr. 26, 2023) (Arias, C.J.) (citing Albany Ins. Co. v. Compañía Civil No. 25-1546 (FAB) 6

de Desarrollo Comercial de P.R., 125 D.P.R. 421, 425 (1990)). The provision in question here, labelled Coverage A, provides coverage for “those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” See Docket No. 8-1 at p. 95. Bodily injury and property damage, both defined in the policy, must be caused by an “occurrence” in the “coverage territory.” Id. Each of these terms is defined very broadly - for example, “bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time,” and the “coverage territory” is the United States, Puerto Rico, and Canada, along with other parts of the world in various situations. See id. at p. 107. The policy then lists several categories of risks excluded from coverage, such as expected or

intended injuries and assumption of liability through contract. See id. at pp. 96-100. Pointing to the qualifier “to which this insurance applies,” Universal argues that their obligations are limited by the business description and classifications in the policy’s declarations. See Docket No. 8 at p. 6 n. 2; Docket No. 8-1 at pp. 8-9 (describing the Hotel as a hotel and restaurant). Universal argues that because renting bicycles is not a typical activity for a hotel or Civil No. 25-1546 (FAB) 7

restaurant, liability for Lerner’s accident is not covered by the policy. The Court disagrees. First, Universal’s interpretation of the policy is not supported by the text of the contract. Universal would have the Court read the business description and classifications as limiting coverage to risks typical to hotels and restaurants. “[T]he general rule[, however,] is that ‘business descriptions’ do not limit coverage to the precise type of business described . . . [and] if the insurer wants to strictly limit coverage to activities within that description, it should explicitly say so.” Old Republic Ins. Co. v. Stratford Ins. Co., 777 F.3d 74, 88-89 (1st Cir. 2015) (Barron, J., concurring); see also Mount Vernon Fire Ins. Co. v. Belize N.Y., Inc., 277 F.3d 232, 239 (2d Cir. 2002) (rejecting insurance company’s argument limiting coverage based on

a business classification, noting that this “would enable an insurer to limit its policy coverage through classification listings without alerting the insured to the limitation.”) Here, the insurance contract never indicates that coverage is limited to activities falling within the scope of the business classifications. The classifications are simply listed in the declarations without any reference to coverage. Accordingly, the Court cannot infer that the parties intended coverage to be limited by these classifications. Civil No. 25-1546 (FAB) 8

Nor does the mere presence of the business classifications in the policy declarations create ambiguity about the scope of coverage.2 Had Universal wished to limit coverage based on the business classifications, this limitation would have been straightforward to draft by adding what is known as a “classification limitation endorsement.” See, e.g., Colony Nat’l Ins. Co. v. Hing Wah Chinese Rest., 546 F. Supp. 2d 202, 206-12 (E.D. Pa. 2008) (finding that the insurance contract’s classification limitation endorsement, specifying that “coverage under this policy is specifically limited to those operations described in the declarations under ‘Classification[,]’” limited coverage to restaurant activities only, excluding delivery service). The absence of a classification limitation endorsement in Universal’s policy indicates that the parties did not intend to

limit coverage based on the classifications listed in the declaration. There is a second explanation for what the business classifications are in the policy, which undercuts the inference that they are meant to limit coverage. Business classifications are used to estimate the policyholder’s risk profile when calculating its insurance premium. See Cincinnati Ins. Co. v.

2 Even if they did, ambiguities must be construed in favor of coverage. See W Holding Co., U.S. Dist. LEXIS 94005 at *19 (quoting Guerrido García, 143 D.P.R. at 348) (“Any ambiguity must be resolved in favor of the insured.”). Civil No. 25-1546 (FAB) 9

Wilkerson, 616 Fed. Appx. 813, 817 n. 3 (6th Cir. 2015). Subsequent changes in the policyholder’s risk profile may be addressed through premium audits performed by the insurer. See Docket No. 8-1 at p. 106; Zurich Am. Ins. Co. v. UGS Priv. Sec., Inc., No. CV 22-1163-GW-Ex, 2023 WL 3565063, at *2 (C.D. Cal. Jan. 20, 2023) (outlining premium audit process). Following an audit, the insurer can modify the policyholder’s premium to reflect any newly discovered risk exposure. Id. In other words, the contract contains a specified mechanism for addressing changes to the policyholder’s risk profile that does not involve denying coverage for activities outside the scope of the business classifications. Universal’s proposed interpretation of the policy also would introduce substantial coverage uncertainty without notice to the

policyholder. The business classifications do not purport to provide a detailed description of all the Hotel’s operations. There is no list of “hotel activities” to which the Hotel can refer when considering the extent of its coverage. As this case demonstrates, assessing whether an activity falls within the scope of a business classification is not an exact science – whether renting bicycles should qualify as a “hotel activity” is not immediately obvious. Because the purpose of an insurance policy is “to provide protection to the insured,” CH Props. v. First Am. Civil No. 25-1546 (FAB) 10

Title Ins. Co., 43 F. Supp. 3d 83, 97 (D.P.R. 2014) (Besosa, J.) (citing Quiñones López, 141 D.P.R. at 155), the Court will not construe the contract in a manner that transfers substantial coverage uncertainty to the insured Hotel without explicit language placing the Hotel on notice. Accordingly, the Court rejects Universal’s argument that it has no coverage obligation for Lerner’s accident under the Hotel’s CGL policy. Dismissing Universal as a defendant is therefore unwarranted. IV. Conclusion For the above reasons, Universal’s motion to dismiss is DENIED. (Docket No. 8.) IT IS SO ORDERED. San Juan, Puerto Rico, January 21, 2026.

s/ Francisco A. Besosa FRANCISCO A. BESOSA SENIOR UNITED STATES DISTRICT JUDGE